Shandong Province enjoyed steady economic growth in the past year, with its GDP exceeding 6 trillion yuan in the first three quarters of 2021,.and the province has had a number of growth highlights as it transitions from old growth drivers into new ones. Lawyers from Jinan and Qingdao share with ALB their observations on upcoming opportunities brought about by this economic transformation.
It has been three years since China released the Overall Plan for Constructing a Comprehensive Experimental Zone in Shandong against the Transition from Old Growth Drivers into New Ones in 2018. As 2022 dawns, it marks a crucial point for Shandong as the province is expected to “make preliminary progress in three years and significant breakthroughs in five years” in terms of economic transformation.
In the past few years, the province has made progress with its endeavours to “phase out outdated capacity, incubate emerging industries, and upgrade traditional industries.” New technologies, new industries, new business models and new economic models contributed 30.2 percent of total GDP in 2020. The top five traditional industries have also accelerated the pace of upgrading, with intelligent technologies being adopted among 70 percent of industrial enterprises above the designated size.
“The transition of old growth drivers into new ones is, first of all, a change in mindset, and such shift will ultimately lead to the commercialization of technological achievements,” summarizes Mou Yunchun, director of Dentons Qingdao Office, when talking about the profound changes that have taken place in Shandong over the past years.
According to Xiang Hao, director of Dentons Jinan Office, the effects of this transition will be more extensively and rapidly perceived in the future. Xiang tells ALB that Jinan has constructed a start-up area for such transition, and going forward, the city will “promote more efficient and sustainable development in Jinan and Shandong more broadly.”
NEW OPPORTUNITIES
Fast-paced economic transformation has indeed brought profound changes to the legal industry. These changes, according to both lawyers, are reflected, first and foremost, in the depth of legal services for governmental authorities.
As Mou puts it, to facilitate economic transformation, “the government has to enact new regulations to boost growth in emerging industries, whilst at the same time maintaining policy consistency. Dentons Qingdao is legal advisor to the Qingdao municipal government and many functional government departments, providing a full range of legal services that cover policy formulation, commercialization of technological achievements, capital financing and talent attraction.”
Xiang concurs: “The government has taken a series of measures to optimise the business environment. With the start-up area in Jinan, Dentons Jinan has, in addition to serving corporate clients, acted as an expert advisor to government agencies and contributed to government-related projects in areas of governance, environmental protection and rural area revitalization.”
Further, corporates have been increasingly involved in innovative initiatives. In 2020, Shandong reported more than 30 percent annual average growth in the number of high-tech enterprises, ranking the third in the country in terms of the number of small and medium-sized technology enterprises being registered in national database. High-tech enterprises contributed 46 percent of their total industrial output.
Mou adds that in the past year “Dentons provided full legal compliance services for enterprises in their R&D and high-tech projects to facilitate their growth. We helped them ensure the high-tech projects introduced comply with national industrial policies and the talents attracted and technologies introduced comply with applicable regulations, and avoid labour disputes and legal risks of unfair competition that may arise during the recruitment, departure and employment of employees in both traditional and emerging industries.”
Xiang tells ALB that in the past year, a Dentons Jinan team led by senior partner Bai Leping was involved in an equity fund deal relating to growth driver transition, supporting the entire process spanning the structuring of transaction plans, drafting of transaction documents, and filing applications to regulatory authorities for review and approval.
BLUE OCEAN AREAS
In the past couple of years, Qingdao and Jinan, as the two most developed cities in Shandong, have shown many economic development highlights. Bucking the trend amid the pandemic in 2020, the two cities continued to grow their economy, joining the GDP “trillion club” in China.
The Chinese Cities of Opportunity 2021 report published by PwC ranks Jinan and Qingdao among the most promising cities in China, with Jinan excelling in human capital, innovation capability and ease of doing business, and Qingdao leading in technical sophistication.
To Xiang, 2021 “was the year when Jinan extensively implemented the key national strategy of promoting ecological protection and high-quality growth in the Yellow River Basin.” Therefore, law firms’ new practices centre around “multiple areas such as incubation of and support for the growth of high-tech enterprises, research on ecological governance, cross-border trade and attraction of top talents.”
Specifically, in the past year, Dentons Jinan provided legal services for Jinan Industry Development Fund in a number of investment projects involving cross-border e-commerce and technology innovation companies, was appointed perennial legal advisor to many enterprises in the new energy development field, and achieved outstanding performance in the fields of artificial intelligence, attraction of foreign investment and supply-side reform.
As for Qingdao, Mou observes that the effects of financial support for the real economy were increasingly evident as the development of new industries evolves. “Qingdao, as a new global financial centre growth, has seen an increase in demand for capital market legal services,” he says.
Qingdao has been included in the Global Financial Center Index (GFCI) ranking since 2016, and it ranks 38th globally in 2021, closely following Beijing, Shanghai, Guangzhou, Shenzhen and Chengdu among Chinese cities. Mou says that as financial activities continued to prosper, “Dentons Qingdao has been providing one-stop, specialized capital market services for enterprises, including those for listing, mergers and acquisitions, restructuring and bond issuance, as well as acting as an independent director and perennial legal advisor.”
FOREIGN-RELATED SERVICES
The contribution of cross-border activities to Shandong’s economic development cannot be ignored. According to the Report on Regional Economic Development in Shandong, the province has “pushed forward the transition of old growth drivers to new ones with its opening-up efforts, and has been actively involved in the Belt and Road Initiative. The total number of newly established foreign-invested enterprises in Shandong has exceeded 10,000, among which 812 are funded by Fortune 500 firms. Shandong has become a hotbed for investors at home and abroad to invest and start business.”
“Qingdao, as a global city open to foreign investment, places equal emphasis on going global and foreign investment attraction,” says Mou. He tells ALB that as to “go global, Dentons Qingdao has been delivering compliance guidance to Chinese firms in the fields of infrastructure construction, foreign trade, home appliances and finance. It also provides full services for foreign companies investing in Qingdao and Chinese firms investing abroad, including early-stage consultation, registration with industry and commerce authorities, perennial legal advisory and industrialization.”
To open up even wider is also one of the priorities for Jinan to boost its economic development. Take Jinan’s central business district as an example. According to local media Economic Information, this district has now become headquarters to more than 500 top firms, 14 of which are Fortune 500 firms such as Microsoft and Oracle. This district will continue to strengthen its positioning to grow the “finance+” mode of business and headquarters economy to build itself into a financial hub along the Yellow River.
According to Xiang, Dentons Jinan has been serving foreign-invested enterprises and joint ventures for many years. “As Jinan puts more focus on the attraction of foreign investment, Dentons Jinan was appointed perennial legal advisor to the Jinan Investment Promotion Bureau in the second half of 2021 to advise on various issues relating to policy formulation, foreign investment attraction, investment services and internal management systems.”
LEGAL SECTOR GROWTH
The effects of economic transformation on the legal sector are reflected not only as growing opportunities, but also in terms of numbers. Shandong boasts a large lawyer population. In 2020, it had 31,468 lawyers practicing in 2,290 law firms. It is worth noting that statistics from the lawyers’ association show that Shandong lawyers booked a total earning of 10.03 billion yuan in 2020, a year-on-year growth of 21.97 percent, with per capita earning also increasing by 16 percent.
“This growth is inseparable from the general background of continued evolution and growth in this era,” says Xiang. “After years of efforts, Jinan has opened a new chapter in city construction and its cultural landscape, and this has led to an increase in demand for high-quality and specialized legal services.”
Speaking of the future trends in the sector, Xiang comments that “advocating green and sustainable development and promoting economic and social development to be more environmentally conscious will be a key theme forward…This requires technology-empowered, low-carbon development,” and will bring new opportunities to legal services in areas such as green and ecological agriculture, renewable energy and high-tech enterprises.
Faced up with these changes, Dentons Jinan has been well prepared. “Our office is building a more inclusive and more specialized professional team. Based on our existing strength, we will fully explore how to structure lawyers’ practice groups better to tackle the challenges posed by constant changes and developments in the future,” says Xiang.
